Compared with the last several months of strong NFP results, the March reading surprised considerably to the downside with only 88K jobs added. April employment numbers, due out this week, should indicate whether the slowdown is here to stay or if it was just a one-time weakness.
Analysts' forecasts regarding the outcome of the next NFP report are in a tighter range this time, as the majority expect only a slight pick-up in US job growth, between 100K and 150K. "Given the dismal March figure and the on-going effect of fiscal tightening, I do not expect to see a good NFP number," says Phil McHugh, who points to an increase of 125K. Luciano Janelli, who reminds that recent US housing results leave much to be desired, also "would suspect the current soft patch to persist for some time."
Only two of the market experts polled for the forecast report predict that US jobs numbers will come in below 100K in March, which, as Valeria Bednarik suggests, "will be indeed a setback for US recovery, and the idea of an end for QE later this year will lose strength, putting the American dollar under pressure particularly against its European rivals."
But there are some optimistic voices as well, such as Adam Narczewski, who believes that the dismal March NFP reading was “a onetime thing” and expects an increase in the 130-160K range as well as an upward revision of the last weak reading. Ilian Yotov is even more upbeat saying that “ job creation is expected to pick up the pace in April”, rising by 160K and giving “the USD a boost on expectations that the Fed might take the first step toward monetary policy tightening sooner rather than later.”
US NFP numbers for April will be released on May 3 at 12:30 GMT.
19 market experts took part in the forecast
|Ilian Yotov, Valeria Bednarik
|Adam Narczewski, Joseph Trevisani, Brian Kahn, David Pegler
|116-130K||Yohay Elam, Luciano Jannelli, Greg Michalowski, Phil McHugh, Gus Farrow, Alberto Muñoz
|101-115K||Bill Hubard, Dale J Pinkert, Mauricio Carillo
|70-85K||Nik Kalsi, Mark De La Paz
Below you will find the complete commentaries of some of the contributing experts.
Luciano Jannelli, Ph.D. - Chief Economist at MIG Bank:
"The six months prior to March have registered an average job creation in excess of 200K per month. This implies an annual growth rate at around 3% per year. Given currently still relatively high household debt levels, such growth rate is not sustainable. In this sense the weak March data imply a reversion to the (post-Lehman crisis low growth) mean. I don’t think we are already going to see a significant pick-up in April. Rather, if I look at recent housing data, I would suspect the current soft patch to persist for some time. I would expect job creation between 100K and 150K."
Phil McHugh - Senior Analyst at Currencies Direct:
"Given the dismal March figure and the on-going effect of fiscal tightening, I do not expect to see a good NFP number. However, I do expect an improvement on March to 125K."
Ilian Yotov - FX Strategist and Founder at AllThingsForex:
"Following a dismal NFP report in March, job creation is expected to pick up the pace in April. The U.S. economy is forecast to add 160K jobs compared with 88K in March, while the unemployment rate stays unchanged at 7.6%. An upbeat NFP report should help to dismiss last month's unexpected drop as a one-off event and could give the USD a boost on expectations that the Fed might take the first step toward monetary policy tightening sooner rather than later."
Adam Narczewski - Financial Analyst at X-Trade Brokers, XTB:
"The last (March) NFP report not only disappointed but mainly surprised traders. I believe it was a onetime thing and the April reading will be better. The consensus around +150K seems reasonable to me and I expect a reading in the 130-160K range. Still, the NFP report could be an occasion to trade long the USD as there might be a revision of the surprisingly weak 88K reading from last time."
Steve Ruffley - Chief Market Strategist at InterTrader.com:
"I think the majority of analyst were predicting a less favourable NFP was on the cards but I certainly think 88K caught a few market participants by surprise. Even this did not shake the markets to the core and within the close, the markets across the board erased the majority of the losses. Dip buying continues to be evident in the markets. In trading terms we have had the correction in the NFP figure, so where do we go from here? I would suggest that get back to some sort of parity and I guess the obvious temptation is to stand out and predict a minus figure, however I think that we will stay fairly flat and I expect a figure of 100K with modest gains, arrange on the low of 50K and high of 155K."
Mark De La Paz - Instructor at FX Instructor:
"US initial claims has been picking the past weeks surprising markets on the upside while continuing claims appear to be bottoming out in its 4-week averages. Regional manufacturing surveys have also been underwhelming along with surprising weakness in other hard economic metrics we are looking for US Non-farm payrolls to remain under the 100,000 mark for the coming months as sequestration continues to take its toll with the end on the budget cuts impact on the broader economy still out sight. We however will not be surprised if the dollar were to strengthen on bad news as long as we don't see a contraction in the workforce the US is still in better shape than the rest of the major economies with others just beginning to recognize the need for quantitative easing to shore up their economies. NFP forecast: 70K."
Yohay Elam - Analyst at Forex Crunch:
"After a weak figure for March, the Non-Farm Payrolls will probably be better this time, around 130K. Jobless claims have been stable and other indicators still point to growth, even if the pace isn't similar to the one seen earlier, a pace of over 200K job gains. It will be interesting to watch the participation rate, which dropped in March to levels last seen in 1979. A small rise could be seen now. Another drop will be worrying, especially for the Fed."
Bill Hubard - Chief Economist at Markets.com:
"Jobless claims rose 4,000 in the week of 16 April – the survey week for the employment report – to 452,000. This boosted the 4-week average 2,750 to 361,250, a substantial deterioration from 340,750 in the March survey week. Our initial forecast for April non-farm payrolls is +110,000, which would be only a slight pickup from the weak 88,000 gain in March and we would once again expect NO change in the unemployment rate at 7.6% UNLESS we see a further deterioration in the ‘looking for jobs’ category. We expect the sequester to be about a 40,000 hit to April jobs, with both some direct weakness in federal government jobs and also knock on impacts in private sector categories such as manufacturing, healthcare, and transportation. We also look for the unusually cold weather in the second half of March and early April to be a roughly 25,000 headwind. Seasonal hiring is very large in April, so any weather-related delays in the hiring of hundreds of thousands of employees in seasonal areas like construction, landscaping, and golf courses can be a significant problem for seasonally adjusted job growth."
Alberto Muñoz, Ph.D. - Forex Analyst at FXstreet.com:
"Non Farm Payrolls still remain in the 50K - 250K range. While the released data keeps between the boundaries we should expect a slow growth in employment as well as in the GDP, but a break outside this range will indicate where's the economy heading. My NFP forecast is the 120-140K range. "
Valeria Bednarik - Chief Analyst with FXstreet.com:
"Upcoming NFP reading will be key to determine market sentiment regarding the US recovery, as it will answer what most investors' are wondering: has past month 88K been a knee-jerk, or are we at the beginning of a new, softer trend? Overall, the balance leans towards a softer trend, as macroeconomic data disappointed most of the month. Another reading below 100K will be indeed a setback for US recovery, and the idea of an end for QE later this year will lose strength, putting the American dollar under pressure particularly against its European rivals. NFP Forecast: 150K."